Taiwan targets 25-fold gain in biodiesel consumption

By Yu-huay Sun, Bloomberg

Taiwan is targeting a 25-fold increase in biodiesel use in the next three years to cut reliance on energy imports and reduce emissions of harmful gases, a government official said.

Biodiesel use may rise to 100,000 kiloliters (equivalent to 630,000 barrels) in 2010, from an estimated 4,000 kiloliters this year, Yeh Huey-ching, head of Taiwan’s Bureau of Energy, said in an interview. Diesel sold at filling stations will have to contain 1 percent biofuel starting in 2008 from zero now, he said.

Energy from the island’s own resources, mostly hydropower and natural gas, accounts for just 1.8 percent of supplies. Taiwan will use soybeans, sunflower seeds and recycled cooking oil to make biodiesel and turn sweet potatoes and corn into ethanol, said Yeh, whose bureau held a briefing on plans for biodiesel sales in Taipei yesterday. “We are developing clean and alternative energy sources,” Yeh said. The biofuels plan may contribute to Taiwan eventually meeting as much as 8 percent of its own energy needs, Yeh said, without giving a timeframe. Lawmakers must approve the proposal, which requires a change to the island’s Petroleum Management Law.

Biodiesel use last year was restricted to “a few hundred kiloliters” consumed mostly by garbage removal trucks. Consumption of ethanol for transportation may rise to 100,000 kiloliters in 2011, from zero now, he said.

The project needs the support of CPC Corp. and Formosa Petrochemical Corp., the island’s two oil refiners. “Technically, there’s no problem” supplying the blended fuel, Liao Tsang-long, a CPC spokesman, said by telephone in Taipei Wednesday. The state-owned company will start selling diesel with 1 percent biofuel content at 82 gasoline stations later this month, he said. CPC has about 75 percent of Taiwan’s gasoline and diesel market, and Formosa Petrochemical the remainder.

Starting September, eight CPC-run service stations will sell gasoline containing 3 percent ethanol and government departments will be encouraged to use the fuel, Yeh said. Buses in Kaohsiung, Taiwan’s second-biggest city, have been running on fuel that contains 2 percent biodiesel since January, he said.

Taiwan had 2,615 gasoline stations as of June, according to the energy bureau. Diesel demand totaled 6.3 million kiloliters last year, while Taiwan used 10.3 million kiloliters of gasoline. Requiring all filling stations to sell biodiesel will mark a “revolutionary step” for Taiwan, Yeh said.

The island has four plants producing biodiesel and two more are under construction, enough to meet Taiwan’s requirements, Yeh said, without giving details. Still, Formosa Petrochemical said it’s not clear whether the island can cover its biodiesel needs.

“If we are allowed to import biodiesel, there won’t be any problem,” Lin Keh Yen, a director at Mailiao based Formosa Petrochemical, said yesterday. “We aren’t sure if domestic plants can provide steady supplies,” he said. “It’s a question if there’re enough raw materials.”

Taiwan’s government wants renewable energy forms, such as solar power and cleaner-burning biofuels, to curb production of greenhouse gases. The island accounted for about 1 percent of the world’s carbon dioxide emissions in 2004.

The government’s plan faces the obstacles of limited farmland to produce supplies and the increased cost of making diesel blended with biofuels, said economist Liang Chi-yuan.

“Where are you going to get that amount of biofuels?” said Liang, a research fellow at Academia Sinica in Taipei, Taiwan’s state research institute. “Who’s paying the costs?”

Biodiesel costs NT$53 a liter, according to the energy bureau. That’s more than double the NT$25.8 CPC charges for its premium diesel at filling stations. The government last year signed contracts with farmers for fields totaling 1,721 hectares for energy-yielding crops, such as soybeans and sunflowers, the energy bureau said on its Web site.